New rules will protect personal assets of law firm partners

Limited liability partnership means partners will not be personally liable for a firm’s debts

Partners in law firms will be able to protect their personal assets by using new corporate structures following a move on Monday by Minister for Justice Charlie Flanagan.

Law firms will be able to set up limited liability partnerships (LLPs), a form of ownership already used by law firms in the UK, following the commencement of a section of the 2015 Legal Services Regulatory Authority (LSRA) Act.

Up to now, partnerships have been governed by the 1890 Partnerships Act. It is expected more than half of all Irish law partnerships will choose to take up the new status.

However, new regulations will have to be finalised by the LSRA before the first structures can be put in place.

Also on Monday, the LSRA finally took over responsibility for the complaints procedure governing solicitors and barristers, one of the largest shake-ups in recent times in how the Irish legal system is regulated.

Complaints made up to Monday against solicitors and barristers will continue to be investigated by their respective professional bodies, but all new complaints will be examined by a process overseen by the LSRA.

Negligence claims

Partners in Irish law firms are joint and severally responsible for the debts of their partnership or any negligence claims that might arise against the business. This means that each partner is personally responsible for all the debt that may be created by any partner or employee of the firm.

With LLPs the partners will not be personally liable in this way, but rather the debts will be limited to the assets of the firm, in the same way that the debts of a limited liability company are limited to the assets of the company.

In fact, law firms have professional insurance that covers claims that might arise against the firm. However, the partners’ assets are at risk if the insurance should prove to be flawed or insufficient.

In minutes of its board meeting for April, posted on its website, the LSRA noted that the introduction of the new structures was being held up by the demands of Brexit-related commencement orders.

The minutes of the meeting also noted that arrangements were being put in place for staff experienced in dealing with complaints to be transferred from the Law Society, as well as the recruitment of new staff.


The delay in getting a response from the Department of Public Expenditure and Reform about the authority's workforce plan, sent to the department in February, meant that a date from earlier this year for the assumption of the new powers by the authority was not going to be met, the minutes recorded.

“The executive were instructed to press the matter [with the department], particularly the urgency in having [the complaints procedure] in operation.”

The authority recorded its “grave concerns” about the absence of engagement by the department which, it said, was “posing a real threat” to the LSRA in the performance of its functions.

The introduction of the new complaints system is one of the core matters contained in the 2015 legislation.

Director general of the Law Society Ken Murphy said he did not anticipate much, if any, change in relation to the outcomes from the solicitors' complaints procedure.

Colm Keena

Colm Keena

Colm Keena is an Irish Times journalist. He was previously legal-affairs correspondent and public-affairs correspondent